Are corporations just fooling people with climate change promises?
A flood of big corporations and governments have gone public with their commitments to help halt climate change. While such devotion to achieving net-zero emissions makes a great press release, are corporations telling the truth? Or are there easy and clever ways to get around actually doing something to help the planet? In this feature, Heidi Staples asks:
- When corporations speak about ‘net zero’, are they serious, or is it a smokescreen?
- Has the corporate world started to think differently about profits and the planet?
- Is climate change now seen less as an unfolding catastrophe and more as a growth opportunity?
- Does the global corporate and government rush toward net-zero mean a sustainable future?
Net-zero – seeing the forest for the trees
The global response to climate change is in a pivotal decade. Corporations have pledged to achieve net-zero emissions by 2050. The corporate governance bodies and other stakeholders are asking how exactly corporations aim to fulfil their vows. 2020 was the year net-zero commitments hit the mainstream, as these assurances doubled in less than a year.
As part of these global systemic efforts, it is said that corporations will face financing assessments. This serves as governance check-points for determining which corporate initiatives are part of the solution. Additionally, the financing institutions will also come under governance through customer pressure. “Banks, pension funds and asset managers have to show where they are in transition to net zero. And people are voting with their money,” says Mark Carney, the UN Special Convoy on Climate Action and Finance.
Corporations and governments have begun reimagining climate change as less unfolding catastrophe and more growth opportunity. Across the board, these entities are moving “economies to net zero as quickly as possible.” The stories of net-zero devotion could suggest a real change. Perhaps the corporate world has begun to think beyond a rapacious growth mindset. Maybe the global system will be driven by more than a pitiless financial profit. The good is in the details.
There is a need for good governance
Analysts say that the global corporate and government rush toward net-zero does not necessarily mean a sustainable future. These bodies rely on offsetting and carbon sink measures, which, together with stable or rising emissions, may amount to green-washing. Governance boards will want to look behind the rhetoric and examine carefully net-zero strategies.
Despite the rousing language, Royal Shell Oil’s 2021 announcement of a new 1.5C pathway, a so-called “accelerated strategy”, hastens no new vision, according to Climate Brief. Instead, the plan “is virtually identical to its 2C predecessor, with Shell’s vision of a continued role for oil, gas and coal until the end of the century remaining essentially the same.” Rather than reducing emissions substantially, the so-called net-zero leader plans to “increase its total fossil fuel output in the near term by boosting gas production, and the majority of its capital expenditure will continue to go towards oil and gas.”
Many corporations rely on “nature-based” offsets, predominantly forest offsets, afforestation, and reforestation with tree plantations to achieve net-zero. Carbon Brief points to Shell’s description of their net-zero efforts as an “extensive scale-up of nature-based solutions.” Forestation will capture the energy giant’s 120 million metric tons of carbon dioxide per year. This will be taking over “an area approaching that of Brazil.” Shell reports, “As a start, in the Netherlands, we are supporting Staatsbosbeheer, the Dutch National Forestry Department, to plant more than five million trees over the next 12 years.”
Besides continuing business-as-usual concerning carbon production, corporations relying on forestation continue to harm stakeholders through heavy reliance on monoculture plantations. The Global Forest Coalition expresses concern about the escalation of monoculture plantations. This is because the farms “lead to land grabbing and displacement of communities, human rights violations, freshwater scarcity, biodiversity loss and many other negative impacts, which are felt disproportionately by women and the most marginalised communities.” This is the business-as-usual that inspired activists to organise an International Day of Struggle Against Monoculture Plantations. Carbon offsetting through monoculture forestation is turning woodlands, pastures alive with birdsong, animal and insect-life into towering artificial monolithic carbon-sinks. As more companies make their net-zero pledges, the volume of offsets sought will out-pace the planet’s ability to provide them.
Worse still, these offsets may not even remove the carbon as claimed. A peer-reviewed article published in Science magazine revealed in 2019 that the initial machine estimates of carbon sequestration through forestation were inflated, “resulting in a factor of 5 overestimate of the potential for new trees to capture carbon and mitigate climate change.” Despite these troubling findings, World Economic Forum pledged last year to plant one trillion trees worldwide in the next decade. Corporations will be rushing to gain access to the limited natural resources that may or may not offset corporate excesses. The net-zero claims will need to face scrutiny by governance bodies to assure corporate responsibility to all stakeholders.
We need more than mere carbon sinks
Corporate governance bodies would do well to demand more than mere carbon sinks or even seek only a reduction in emissions. What is needed to tackle climate change is not a particular technology but rather a change in the structural logic that produced climate change in the first place. Rather than an extractive winner-takes-all approach, the emerging commitment to regenerative business practices reveals corporations are reorienting their cultures and practices around collaborative, community values that recognise the interdependence of all planetary lifeforms.
Described by thought-leader Carol Sandford, regenerative business practices apply an understanding of systems theory to “change the nature of work through developing people and work systems that ignite motivation everywhere.” This paradigm shift acknowledges that micro relations create consequences throughout macro operations: “a paradigm and an accompanying set of capabilities that consider any life form as singular, able to express and grow itself to contribute to that essential singularity, over time, to nested wholes in which it is embedded, with reciprocity. It can only be regenerated if pursued as a value-adding process.” This is systems theory 101 for big business, which has gained massive profits from ignoring its fundamental truth.
A few major corporations have applied Sandford’s insights over the last decade; companies like DuPont, Proctor and Gamble, and Microsoft reorienting their businesses toward regenerative practices to increase their productivity. Several corporations have recently made large-scale commitments to regenerative business practices to address climate change, including General Mills, Starbucks, Danone Foods, Interface, and Patagonia. These innovators are committed to regenerative business practices by reducing emissions and cutting waste while also investing in technological innovation and making decisions based on an understanding of symbiotic reciprocity. They are engaging systems theory to consider how each of their choices impacts people and environments throughout their supply chain in the long-term.
It seems blatantly obvious to apply systems theory to the problem of climate change. According to the World Economic Fund, the regenerative business model considers not only long-term impacts but the short-term, with some companies “beginning to operate as a regenerative business to accelerate change.” Responsible business seeks more than corporate profits by understanding “urgent attention to regional needs with a long-term mindset can step-change progress, so that each community the business touches can thrive.” By engaging in regenerative business practices, a corporation makes a profit and a contribution to the global community in which it operates.
Gen Z is coming, so watch out, polluters
Corporations relying heavily on short-sighted, self-serving schemes risk not only a troubled conscience but also consumer-led sanctions as the Green Generation comes of age. The Capgemini World Wealth Report reveals that among the increasingly “dubbed ‘Generation Green,’ millennials and Gen Z demonstrate environmentally and socially-conscious consumer behaviour.” This behaviour extends into their investment purchases as well, with Millennials “keen to further the sustainability agenda through investment power.” Those recently entering the market are most committed, “as 41% of high-net-worth individuals (HNWIs) younger than 40 are interested in sustainable investing as compared with 27% of HNWI respondents overall.” High-net-worth individuals are most concerned with how corporations are facing climate change and environmental risks. While, the HNWIs under 40 “rated effective and ethical corporate governance systems as the priority, followed by environmental risks.”
Highly educated and ethically oriented, Generation Green will increasingly hold corporations and corporate governance bodies accountable for the impact on all stakeholders. Corporations with bold climate change commitments that replace net-zero carbon-sink landgrabs with the systemic thinking behind regenerative business practices will fare best.